HCI H2 ECONS CSQs QP(1)

1 © Hwa Chong Institution 2018 9757/01/A/C2 Prelim 2018 HWA CHONG INSTITUTION C2 Preliminary Examinations Higher 2 CANDIDATE NAME CT GROUP 17 CENTRE NUMBER INDEX NUMBER ECONOMICS Paper 1 Case Study Questions Additional Materials: Answer Paper 9757/01 23 August 2018 2 hours 15 minutes READ THESE INSTRUCTIONS FIRST Write your name, CT group, Centre and Index numbers clearly in the spaces at the top of this page and on every page you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid and tape. Answer all questions. Begin Question 2 on a fresh sheet of writing paper. At the end of the examinat ion, fasten your answers to Question 1 and Question 2 separately. The number of marks is given in brackets [ ] at the end of each question or part question. You are advised to spend several minutes r eading through the questions before you begin writing your answers. You are reminded of the need for good English and clear presentation in your answers. This document consists of 8 printed pages. [Turn over

2 © Hwa Chong Institution 2018 9757/01/A/C2 Prelim 2018 Answer all questions Question 1: Waste Recycling Extract 1: US recyclers battered by global commodity plunge US recyclers are fighting to stay alive. Prices for new materi als have fallen so much in the past few years that recycled materials have lo st their edge in the market. Besides, some states such as California had cut their subsidies in state-run recycling programs. Global forces have put the squeeze on recyclers. Growth in China, the largest buyer for several types of recycled materials, has slow ed significantly. Beijing even erected a so- called "Green Fence," which enacted standards on imports of Americans' recycling. Add to that a strong dollar, which ma kes buying U.S. materials more expensive for customers in other countries. Meanwhile, oil prices have dropped to the lowest level in around 13 years. This is expected to have a further negative effect on the price paid for recycled materials such as recycled plastics. As new plastics, which are pr oduced from petroleum, become more cheaply available, manufacturers buy less recycled plastics. "Being green costs money," laments Waste Management CEO David Steiner. "When prices are high we'll pay you to recycle. When prices are low we have to charge you," Steiner says. Sources: The Seattle Times, 5 March 2016 and Forbes, 14 September 2016 Figure 1: Price of Crude Oil Source: US Department Of Energy Figure 2: Price of Recycled Plastics Source: SecondaryMaterialsPricing.com

3 © Hwa Chong Institution 2018 9757/01/A/C2 Prelim 2018 Extract 2: The benefits of recycling Recycling is the process of turning old used materials into new ones. Through recycling, energy and raw materials are saved. Moreover, studies have shown that for every one job in waste management there are f our jobs in recycling. Jobs woul d be created by a new breed of companies that embrace recyclin g and servicing goods to prolo ng their lifespan. Examples include designing goods that last longer and can be repaired easily. It has been estimated that recycling and remanufacturing industries create more than $1 billion in revenue and hundreds of thousands of jobs. According to the Darla M oore School of Business, if just one percent of all households in South Carolina were to recycle an additional eight newspapers per month, it could mean a gain of $3.8 million in economic activity annually for the state. Recycling reduces pollution because manufacturers are reusing materials instead of creating new ones, and toxic chemicals and greenhouse gases are not released into the atmosphere though incineration. Re cycling also prevents hazardous wa ste from being dumped in landfills which can potentially contaminate water sources. Increasingly, many countries including the US have turned to recycling given the high opportunity cost of using precious land for the disposal of waste in landfills. Indeed, recycling is bette r than landfill, because it replaces new materials in the manufacturing process. From the perspective of sustainable develop ment, recycling helps to prevent resource destruction. It takes 4.4 tons of trees to create one ton of paper pulp, and recycled paper reduces solid waste by 29%. Meanwhile, recycling one ton of plastic bottles conserves about 3.8 barrels of oil. Sources: Institute For Local Self-Reliance, 22 December 2016, Renewable Resources Coalition, 15 December 2016, Eco Cycle Solutions Extract 3: Problems with recycling The standard waste hierarchy generally demarcates between waste avoidance and waste management, with recycling squarely in the waste management zone. But recycling sits fairly low down the waste hierarchy. Reducing total waste created in the first place and reusing material as many times as possible, are higher up in the hierarchy as compared to recycling. Besides, recycling process still c onsumes energy (and other reso urces) and costs money. In order to repurpose certain recycled materials, separate manufacturing plants need to be built and used. This would counteract the advantage re cycling has in creating less pollution, since more may actually be generated as a result of the additional factories. Recycling sites are also commonly unsafe. As with any waste, materials to be recycled have to be transported and processed somewhere. This means creating additional locations of potentially hazardous waste. These heaps of trash are grounds for bacteria, disease, and a laundry list of other unsafe conditions. In addition to this, recycling sites are also industrial plants. This means they are not without their own forms of pollution. So recycling needs to be seen as what is – a last line of defence. Minimising waste is more important than managing it, and we need to keep our focus there. Source: Renewable Resources Coalition, December 2016, Planet Green Recycle [Turn over

4 © Hwa Chong Institution 2018 9757/01/A/C2 Prelim 2018 Extract 4: How Pay-As-You-Throw works Traditionally, residents pay for waste collec tion through property taxes or a fixed fee, regardless of how much trash they generat e. Pay-As-You-throw (PAYT) breaks with tradition by treating trash services just like electricity, gas, and other utilities. Households are charged based on the amount of household trash they throw away. They would then purchase trash bags that correspond to the weight and size of the trash that they dispose. This creates a direct economic incentive to recycle or reuse more, and to generate less waste. One of the most important adv antages of a variable-rate program may be its inherent fairness. When the cost of managing trash is hidden in taxes or charged at a flat rate, residents who recycle and prevent waste subsidise their neighb ours' wastefulness. Under PAYT, residents pay only for what they throw away. Source: United States Environmental Protection Agency Questions (a) (i) State the relationship between the pr ice of crude oil and the price of recycled plastics shown in Figure 1 and Figure 2. [1] (ii) With reference to Extrac t 1, explain how a fall in the price of crude oil might impact the price of recycled plastics. [3] (b) Explain what Waste Management CEO Da vid Steiner meant when he said, "when prices are high we'll pay you to recycle. When prices are low we have to charge you.” [2] (c) Use the concept of opport unity cost to explain two reason